Author: Hawkeye

For those of you who went to the Hawkeye Seminar in Charlotte, I envy you. I was unable to make this one and hope to be at the next one!

I’m sure your learning curve was parabolic just for having attended. Even though I could not attend, I am continuing to learn.

This Week’s Lesson

What I learned this week is… Patience is Key!

What do I mean by that?

Learning to be patient and to wait for your setup is the KEY to fulfilling your trading dream! You could say Discipline to wait is key but I like the positive reinforcement of saying Patience is Key.

We could go into the subconscious mind and how it works but that is for another time…

Practising the 3-Step Entry Method

Today I worked on the Hawkeye 3-Step Entry method. As you may have read in my past blogs, I have chosen this entry method to learn and perfect in Simulation before risking my hard earned capital.

So today was a day of practice and patience.

A picture is worth a thousand words!!

Learning to Wait

As you can see from my chart, I was not always patient for my set ups.

Part of it is the learning curve of remembering the entry criteria and the other part is pure impatience. I have a known problem with that and so am working with the Hawkeye software to curtail it.

There are two entries where I was ‘anticipating’ (yes, my other problem) where I thought the market was going and so I traded into the belief that I know more than what the volume indicators are telling me.

Boy, was my hand slapped on those.

Practicing Patience

Thankfully, properly following the entry criteria and sticking to it showed me that being Patient and waiting for the proper set up is Key to a nice profit.

Tomorrow, and the days that follow, will be more practicing my patience until I am strong in trading the 3-Step Entry Method. I hope you practice your patience also.

Great trading everyone and speak with you again soon.

Join Randy in the next free LIVE Hawkeye Demonstration Room held every Wednesday at 9.30am EST US. You will learn more about volume and volume price analysis and see more examples and live trade setups. It is open to all.

How important is your win loss ratio?

In today’s article, I want to look at the win to loss ratio and its importance to a trading system.

Let me start by posing a conundrum; would you prefer to walk down the high street with a verified badge on your chest showing off a 92%-win loss ratio or would you prefer to drive down that high street in a top of the range sports car?

The bottom line is that the win loss ratio is just a measure of a system and we should only focus on being profitable.

What happens if we get fixated on our win ratio?

Focusing on our win ratio can result in premature exits from profitable trends, and holding losing trades far too long. Systems based on a high win loss ratio are also higher risk. They usually result in few losses, but these losses are extremely large and can massively damage your account.

If we get emotionally upset by taking a loss then it suggests that we are more interested in being right than focused on being profitable.

What win ratio should we aim for?

The answer in short is that we should not focus on the win loss ratio as this is only a measure of our system. Our focus should be entirely on our trading rules; to make a profit.

How then should we use our win ratio?

Different trading systems need different win ratios to be profitable.

As an example, if a system has a win loss ratio of 2:1, and we risk $50 per trade, then a win will produce $100. In this scenario, so long as we have a win ratio above 34%, then we will be profitable.

To demonstrate this let us say that we take 100 trades and win 34% = 34 trades.

We then test the system over 10 rounds of 100 trades and find out if the system is profitable.

If the system is profitable, we then focus entirely on the trade rules and executing the trades. We are not concerned about losing trades since we only need to win 50% of our trades, and that the system will provide that.

Closing out trades the Hawkeye Tomahawke FX Suite

In the Tomahawke scalping system, the strength of a currency can quickly change since we are trading fast time charts. If we focus on the current combined profit of all trades at one time, and reach our profit target, we should be happy to close out the trades, even if 4 are profitable and 2 are losing trades, as shown in the example below. Don’t be concerned that the -$5.04 trade would be counted as a losing trade as its value is insignificant to the overall profit.

In summary, my hope is that this article has helped you think about win loss ratios in trading. Understanding win loss ratios will aid you in becoming a better trader.

Reduce Your Errors

I would like to speak about how to reduce your trading errors. Like tennis, trading is a game of errors. In other words, we generally self-limit our success. Our outcome improves when we make fewer errors .

If your trading method has a potential 60-70% win rate, but on 2 out of 10 trades you execute poorly, it will be difficult to make money as a trader.

So it pays to strive for perfection in those elements that are under our control, since randomness plays such a large role overall.

First Mouse Syndrome

One of the most common issues traders face is a collection of behaviors I call the “First Mouse Syndrome.”

“First Mice” get whacked when they go for the cheese.

One reason is that First Mice tend to be excitable and they enter trades too early. It could be from greed, fear of missing out or just plain impulsiveness. Impulsiveness is usually driven by an over-reliance on intuition and an under-utilization of a technical method.

Premature entries lead to taking “heat” because the market has not yet developed internal coherence. The more push-back we experience, the more defensive we get. This leads to micromanaging trades and tightening mental stops.

Unfortunately, this almost always works against the trend trader. The key to trend trading is to give the market sufficient room to breathe once a trend is established.

The Hawkeye Trend Indicator

The Hawkeye Trend and Stops indicator is designed to do precisely this. However, with the three speed settings, you have some discretion in how you apply this indicator. Because first mice prefer to get in early, they will typically set Hawkeye Trend to ‘Aggressive.’

If you find that you are getting stopped out of good trades, you may be experiencing the stop hunting games that typically occur in futures and forex near key support and resistance levels. These games trap and punish First Mice.

The irony is that responsible First Mice stop themselves out willingly because they have been taught to manage risk with relatively tight stops. They want to “keep losses small and let winners run.” But 1 wrong + 1 right = Zero (a breakeven trader, at best.)

If you are getting stopped out and then find that the market often reverses and goes your original way, it may help you to think like The Second Mouse.

The Second Mouse

The Second Mouse gets the cheese by simply waiting for First Mice to be stopped out before taking action.

First mice tend to get stopped out when the first pullback fails. For example, if they shorted, the market quickly makes a new high and stops them out. . . and then the downtrend resumes.

If they went long, the market makes a new low and stops them out. . . and then the uptrend resumes.

This process creates the common ABC countertrend patterns that occur within trends. You will get stopped out on the A-leg of the ABC if your stop is too tight . If this is happening for you, consider adjusting Hawkeye Trend and Stops to the Conservative setting.

Moreover, it’s usually not a good idea to use mental stops to manage positions in a trend. Chances are you will react to random noise, micromanage your trade and choke it off.

Closing

You can watch a free video that discusses the First Mouse Syndrome by following the link below. It’s the latest video in the Hawkeye Mindset Mastermind Breakthrough program, which gives you highly practical weekly videos on trading psychology. Check out HawkeyeMindset.com for more information.

Join Randy in the next free LIVE Hawkeye Demonstration Room held every Wednesday at 9.30am EST US. You will learn more about volume and volume price analysis and see more examples and live trade setups. It is open to all.

There is no better tool to trade with than Volume, and Hawkeye Volume is the Best! Volume leads the way to price direction.

Why?

I’m glad you asked. . .

Volume is a Leading Indicator

Volume is the only leading indicator that signals when price is about to move prior to it happening. You see, Volume is the fuel that drives the market. And when you couple this with triple timeframes, you have a combination that gives traders all over the world the edge.

Hawkeye Volume displays whether buying or selling volume is dominating the market. In other words, it doesn’t just tell you the volume, as with other trading software, but it actually tells you whether the volume is professional BUYING or professional SELLING. This is displayed in a simple and visual way: red shows professional selling, green shows professional buying, white shows no demand.

Below is a great example of a EURJPY setup this morning:

Notice how just before the big price move down, that Volume signaled the intent of price 9 price bars (45 minutes) before the trend began. It is shown by the Red price bar extension with a Hawkeye Pivot (yellow dot). This is significant in that we expect price to reverse 3-5 price bars after a Pivot. However, with opposing volume too, it becomes a compelling signal of market reversal.

In this example, it was quite rewarding. As you can see, using the Hawkeye ATR Levels tool, we achieved a 6:1 Reward:Risk. Setups like this occur every day, and Hawkeye Volume is the best at showing you this action.

The Hawkeye Perspective:

Don’t sit on the sideline and let trades like this pass you by. . . Hawkeye Volume leads the way and is the core component of all our unique indicators.

In today’s article, let’s take a look at how to trade Forex based on Hawkeye volume-based trading principles. And in particular, let’s consider the case where we missed the initial entry and are looking to re-enter an existing trend a little later.

Re-Enter an Existing Trend

In Forex, we always begin with the Hawkeye Fatman indicator. It shows which currencies are relatively strong or weak with respect to all the other currencies. Below is a chart of today’s Fatman showing that the EUR is weak and the USD is strong. Based on this setup, we know that strength cycles constantly, and usually returns to fair value or to the opposite extreme. So in our charts, we look for a probable reversal of trend direction to start our trade.

So the Fatman started to show a reversal setup around 0600, and we saw that the initial trade entry on our charts came around 0630, meaning we missed that initial entry! Bummer! What do we do?

Good question!

In our Hawkeye training room, we teach students to study VOLUME, and that is where we find our answer.

Volume is the Key

On the EURUSD chart below, we see the initial entry we missed, marked by the first green up-arrow. Since we missed the initial entry, all we need to do is wait for the pull back on the volume, which signifies buying weakness. When buying strength returns, the trend continues and signals our re-entry.

As you can see, there are several more opportunities to get into this trend if you missed any of the other previous entries.

The Hawkeye Perspective

As an advanced tip, use the Hawkeye Roadkill indicator. It identifies EVERY volume pull back on a trend, compares it to the longer time volume and signals the best time to enter or re-enter the existing trend. It is a fabulous tool that I would not trade without. But I wanted to make sure you knew how to spot a valid re-entry by just using volume.

I teach this and many other principles in our weekly Wednesday training room. So please come along and join the action.

If we couple that with the US Dollar index (DX), the DX monthly chart below shows the current trend of weakness in the US Dollar.

However, we see this trend hitting support, with declining volume. If the DX were to continue lower, we need to see volume advancing, not declining.

Also, the Hawkeye Fatboy chart below shows that daily Gold is overbought and should start to lose strength, as it cycles back to fair value. This will be accelerated if the US Dollar starts to strengthen, and then Gold will begin to resume its longterm downtrend.

Looking at the daily Gold chart below, notice the volume weakness already beginning. Therefore, watch the daily GC chart for the current uptrend to be broken, with confirming selling volume.

Hawkeye Perspective: Gold is at a critical point now, so watch for the daily Volume on Gold to see if strength or weakness will prevail during this time.

Remember, green buying volume shows strength, and red selling volume shows weakness. If the US Dollar starts to strengthen, this will accelerate the potential for a down move in Gold.

Join me in the next free LIVE Hawkeye Demonstration Room held every Wednesday at 9.30am EST US. You will learn more about volume and volume price analysis and see more examples and live trade setups. It is open to all.

Like any profession, trading well depends on a proper mindset and the execution of specific skills. . . skills that need to be practiced.

Raw screen time doesn’t necessarily build these skills. . . or any skills, for that matter. In fact, excessive screen time can tire you out, zone you out. . . and keep you from developing the real-time skills you need.

It’s a paradox: trading too much is the most common trader problem that’s not even recognized as a problem. Check out this comment from the owner of a popular futures prop shop:

“Our average profitable trader is active less than 3 hours a day. Our average struggling trader logs more than 6 hours a day.”

And I know traders who are in front of their screens 12 hours a day or more!

Sure. . . it’s natural to try harder when you are not getting the results you expect. And it’s natural to expect your results to be proportional to your effort. And in some fields of endeavor these expectations are correct.

But trading isn’t one of them.

Here’s why.

The typical struggling trader operates with an idiosyncratic mix of biases, goals, predictions, snap judgments, impulses and intuitions combined with an equally eclectic set of technical tools.

Although you may swear loyalty to a particular method, such as Hawkeye, when push comes to shove in live trading, many traders quietly change the game.

In this ad hoc situation, the number of unique discretionary combinations available to enter, manage and exit any one trade… probably runs into the thousands.

When the pressure is on, consistency becomes elusive. So elusive that our results can be much worse than chance. Seriously. It will seem like you are missing virtually all the good trades and taking virtually all the bad trades!

I know it sounds impossible, but I hear about this often and I’ve experienced it myself. It causes traders to profoundly mistrust themselves and feel almost cursed.

The good news is that the solution is within everyone’s reach.

Good trading relies on a small group of attitudes and abilities that are the opposite of the idiosyncratic mix we have, by default, in our heads.

Good trading is:

Unbiased,

process orientated,

well-planned,

disciplined, and sometimes

counterintuitive.

A Trading Mindset

This is the mindset needed to trade successfully. We call it the Hawkeye Mindset. (This is how Randy trades, right?) Without it, you are subject to your own random discretionary ideas, impulses and behavior.

Mindset is crucial, but it’s not enough. We also have to master the specific skills regarding entering, managing and exiting trades. Mindset needs to be practiced. . . and so do the skills.

But frankly, most traders never actually practice. . . they just analyze and trade.

Either they feel they don’t have time to practice, they don’t think practice is important, or they think trading itself is practice. But it’s not.

So here’s a quick quiz:

Step 1: Pick a specific attitude or skill you want to get better at. Get very specific.

Step 2: Set measurable goals and track your progress using market replay or practice in a live market in Simulation mode.

Step 3: As you make progress, progressively raise your criteria for success.

Key Point: This recommendation may shock you. . . if you are not yet profitable. . . spend 90% of your time practicing conscious skill development in Simulation Mode. . . and 10% trading live. As you notice your mindset and skills improving, gradually increase the proportion of live trading.

If you are ready to start your own program of conscious practice, download the free video below, which is part of the low-cost Hawkeye Mastermind coaching program available on HawkeyeMindset.com

Join me in the next free LIVE Hawkeye Demonstration Room held every Wednesday at 9.30am EST US. You will learn more about volume and volume price analysis and see more examples and live trade setups. It is open to all.

Mindset of a Successful Trader

It doesn’t matter the amount of money you have. It doesn’t matter if you are a great technical analyst. It also doesn’t matter your depth of knowledge in trading. If you don’t have the right trading mindset, you may never become a successful trader.

The type of mindset you have will determine if you are going to succeed or fail. While having a great psychology is important in trading, most traders just ignore it and see it as something they will work on later. This is a huge mistake.

If you are trading with a wrong mindset, it is not about the money you have in risk capital or how much you have mastered your strategy, you can still fail. No amount of money or strategies can make you successful if you do not have the right mindset about trading.

Below are some important trader mindsets you need to understand if you want to achieve lasting success in the market.

Money and mindset

The truth is that risking money during trading influences your mindset. One important factor to consider in maintaining and achieving the right trading mindset is proper risk management. When you risk more than what you can handle emotionally, this may affect all other part of your trading. This may lead to having a wrong mindset immediately when the trade starts. You may become over emotional and anxious, which is not good for the business. The best approach is to begin your first live trades with small amounts. You have to ‘test the waters’ so as to know your risk spot where your emotion is not too high.

Expectations are key

Most people usually come into the business with high and unrealistic expectations on different things. They are not realistic about how long it will take them to properly learn trading, how long to become consistent and successful, and how frequently they are going to win trades. Starting something with a load of unimaginable expectations, you are simply getting ready for emotional pain.

You have to relinquish every emotional attachment to trading. And also minimizing your risk, just as we have discussed before, can be achieved by not setting too high expectations about your trades.

Simple is better

As humans, we always have the tendency to make simple things complicated, we make things harder than they really should be. This is very true when it comes to trading. Having a messy and complicated trading strategy is the number one thing that can negatively influence your mindset. It is very important that you stay calm and clear your head when trading, and for this to be possible, you need a simple trading strategy, especially one using volume and price action.

Summary

Therefore, building a foundation with a simple but very effective trading strategy is the first step to achieving a proper trading mindset. Next, with a balanced money management approach and with properly managed expectations, consistency and discipline, you will be on the way to developing the right trading mindset, and therefore, consistent trading success.

At Hawkeye Traders, we not only equip you with world-class indicators, and with strategies and training that help you on your trading journey, but we also train you on the proper mindset. We have a whole website dedicated to developing a successful mindset: http://www.hawkeyemindset.com/mastermind/

Join me in the next free LIVE Hawkeye Demonstration Room held every Wednesday at 9.30am EST US. You will learn more about volume and volume price analysis and see more examples and live trade setups. It is open to all.

What separates successful traders from the rest of the pack? Why is it that only a mere 5% really make it in trading? How did these traders do it? While all successful traders have their proven trading strategies and systems to call and manage their trades, they know there is one more important thing to do: focus on improving themselves.

Because the trader is the ultimate resource that can act to produce the desired trading results, he or she must ensure this resource is primed and efficient to perform its best at trading. As such, successful traders pay great attention to the points listed below which elucidate how they go about their trading business.

Treat Trading Like A Business

Top traders know that trading is a serious business and they accord it such importance by considering key factors that affect all businesses. From a trading perspective, these factors include: writing a detailed trading plan; starting out with an appropriate trading account size; knowing the various costs of trading; sustaining and growing the account; and acquiring the right trading knowledge, skills, software and equipment.

Keep The Ego In Check

Trading mistakes can arise from emotional responses directly linked to one’s ego. A trader that needs to be right will let the ego prevail and inflict ruin to his/her account, always trying to will the market which he/she denies cannot be controlled. Being egoistic also means not acknowledging one’s trading mistakes and therefore not learning from them. For example, the ego will egg the trader on to hold a losing trade instead of taking the correct action of cutting loss at the appropriate time.

Be Disciplined In Every Trade

The item that directly affects your bottom line is trading discipline. The serious trader follows his/her trading plan to the letter, and adheres to it as much as humanly possible (Note: even successful traders make mistakes). Trading discipline includes protecting trading capital and sensibly allocating risk per trade; only taking trades that satisfy risk/reward parameters and set up correctly; staying on the sidelines at all other times and not forcing a trade; cutting losses quickly via pre-determined stop loss levels; letting a good trade ride but protecting a winner from turning into a loser. In essence, being disciplined allows the successful trader to show profits consistently and rein in losses should any trading period turn out to be a rough ride.

Protect Trading Capital

The serious trader treats his/her trading money very seriously. It is what enables trading to be done. Additionally, it is also the objective of trading: make winning trades to grow the money. Thus, the successful trader will guard his/her capital zealously, ensuring that risk per trade is controlled so that losers only erode the account, not chew a hole in it. This assures the trader that his/her business can continue, today, tomorrow and into the future.

Don’t Marry Your Trades

The serious trader knows that a single trade does not determine his/her trading success. He/she is fully aware that any trade could result in a loss. Therefore a conscious act of removing any emotional attachment to every trade is essential. While staying disciplined entails waiting for the good trade entries, this wait and eventual trade entry do not compel the successful trader to think that he/she must be right in taking that trade. As such, should the market go against the trader and he/she sees prices approaching the stop loss level, the trader fully accepts that losing is a real possibility and does not rationalize further. The novice trader, in contrast, will often be tempted to move the stop loss further out so as to let the trade have “more room”. Such a trader feels the need to be right and doesn’t know how to walk away from a loser.

Be Realistic, Practical And Persevere

Being realistic is what separates the men from the boys when it comes to trading. The successful trader does not have a get-rich-quick mentality and knows it is hard work; thus he/she treats trading as a business and has the mental fortitude to stay in the game for as long as it takes. Perseverance is a key asset. The trading discipline imposed in the trading plan reinforces this. It results in a personal belief that it is possible to succeed in trading. The serious trader knows he/she is psychologically guided by his upbringing, attitudes and experiences regarding money and success. He is also practical by admitting these limitations and works to break free from such self-defeating barriers. Pursuing the right education from other successful traders are good solutions to the problem.

Know Yourself And Let Others Help You

The successful trader knows his/her strengths and weaknesses when it comes to trading. They are not shy to ask for help. While knowing there is no shortcut to success, the trader often pursues education from the best mentors to acquire the right knowledge and skills essential to becoming successful at trading. As part of the trading plan, the serious trader keeps a trading journal and reviews this daily to learn from past mistakes and internalize winning trade executions. Also, a mentor can use the trade journal to help the trader make specific and personal improvements.

You may need the help of a trading coach. Let Hawkeye Traders help you get back on the path to consistently profitable trading. Contact us today at [email protected] and ask about our Trader Coaching Program. You’ll be glad you did.

Whether you trade stocks, Forex, futures, or options, you need to be up-to-date on financial news. I can’t emphasize how important it is to be aware of pending economic news announcements, or earnings reports if you are currently in an open trade. Not only will it protect you from possible financial ruin, but it can help you to capture a potentially huge windfall. News is important to both fundamental and technical traders alike.

So, here is an overview of my top online sites for news about stocks, forex, futures, and the economy. I do look for different types of information from each one, but I wanted to share my favorite ones with you:

Forexfactory (www.forexfactory.com)
This is my go-to site for economic news releases. The daily calendar gives all the major news that can affect any of the international markets, including GDP, Crude Oil inventories, Unemployment and NFP, FOMC and other world releases and reports… to name a few. Economic releases are important to keep track of, as they can dramatically affect how the market moves. Each scheduled release also has an “Impact” key that shows the expected effect the report can have on the specific region noted.

MarketWatch (www.marketwatch.com)
This is a good site for market news, especially related to stocks. The information is good to know, but remember that they are writers and not traders… so keep that in mind.

finviz – Financial Visualizations (www.finviz.com)
Great overview site for stock traders. This site gives “top 10” lists of specific pattern stocks and signals that have potential trading opportunities. It also gives a great “heatmap” which is a color-coded chart showing sector strength/weakness based on specific companies. It is also a good source for a newsfeed of headlines related to specific names. Lower on the page you can find info on Insider Trading and key Futures stats, including Forex and Bonds.

TradingView (www.tradingview.com)
TradingView is awesome. If you setup a free account, the charting is really good for a web-based application. It is so good that Hawkeye will be developing our suite of indicators specifically to run on TradingView in the near future, and we will host it on our own website, thus freeing you from the attachment to any specific platform. More about this as we get closer to the finish line. Anyway, I like this site because I can filter news based on my interests (specific stock for example). On a single screen, I can review the technical chart and beside it are all the headlines related to the stock on the chart. What a great time-saver.

Of course, there are many others, like Yahoo! Finance, Google Finance, Reuters, Bloomberg, CNBC, etc… I just highlighted my favorites. What is important is the overall sentiment you get from the major headlines and articles, not necessarily what is specifically written in the articles… remember, they are writers, not traders.

Thanks for following my blog.

Trade safe!

Join me in the next free LIVE Hawkeye Demonstration Room held every Wednesday at 9.30am EST US. You will learn more about volume and volume price analysis and see more examples and live trade setups. It is open to all.

Do you know exactly how much you risk each time you place a trade?

In his recent article ‘The Commitment Secret’, Dr. Kenneth Reid challenged us to commit to an ongoing process of self-improvement. In today’s article, we want to consider the topic of trade risk.

Do you clearly define the point at which you will exit a trade if it goes against you?

If we trade without pre-defined exit points, our risk is infinite. As such, it is impossible to calculate the financial risk of that trade, and exposes our entire account to risk. Not only is this extremely bad for our pocket, but it’s also a source of a immense emotional pain and psychological damage.

In this scenario, where would we exit the trade, and by then how big will that loss be?

Do you clearly define how much of your account you will risk on each trade?

If I enter a trade with the same lot size for each currency pair, then I am not defining my risk. Why? Because each currency pair has a different cost per pip. For example, one standard lot on the EURGBP is around $12.80 per pip, whereas one standard lot on the GBPAUD is around $7.50 per pip. So the risk on the two trades is not the same with an equal lot size.

Why should we define the risk on each trade?

If we consider how we bet on a horse race then the answer is quite simple.

The odds are calculated on the probability of a horse winning and we use those odds to define our trade parameters. So, for example, if the odds are 10:1 and I bet $1, then a win would return my $1 stake and $10 in profit. However, if my horse does not win then the bookie keeps my $1 bet. In this scenario, I fully understand that I will lose $1 if my horse does not win and I have considered it a worthwhile trade as I have the chance to make $10 by risking $1.

Now, if the bookie couldn’t tell me how much I will lose if the horse fails to win, but that it might be all the money in my account, (which, incidentally, he holds for me in his own bank account) would I then take a bet on that horse? I certainly wouldn’t – but yet, surprisingly, many traders do.

What are the benefits of defining and accepting the risks on each trade?

How about I say you can be the bookie (to define the trade odds) and then also the customer to take that trade? Well, that is just what we do when we trade.
So, for example, I could set a stop loss at -50 Pips and take profit at +100 pips (1:2 risk to reward) and then risk $100 on the trade. If the trade stops out I lose $100 but if the trade is a winner I will gain $200.

But just remember, as the bookie or as the customer, I have no way to determine or influence the outcome of the race, I am just defining my trade parameters and must accept the outcome.

The skill in trading is then to find high probability trades and to pre-determine the exit, which is the subject for another day.

How do we determine the risk in Hawkeye Tomahawke FX?

Using the Tomahawke method, we use a trade execution tool to place our trades quickly, as we are trading the shorter time charts.

This tool makes us place a stop in the charts. We think about and determine the point to exit that trade should it go against us. In the settings, we also pre-determine how much of our account we wish to risk on each trade (normally ½ percent on each trade).

When we take a trade, the software automatically calculates the lot size given the number of pips to the stop and the total value we are risking on that trade. So, for example, if we are risking $100 on a trade with a 10 pip stop, then we risk $10 per pip. The software calculates that as a lot size and enters the trade. Should the stop be hit, we will lose $100 and no more. We accept this as our defined risk.

I hope this article helps you to think about risk in your trades and how to become a better trader.

Join Me in the next free LIVE Hawkeye Demonstration Room held every Wednesday at 9.30am EST US. You will learn more about volume and volume price analysis and see more examples and live trade setups. It is open to all.

Hi… this is Dr. Kenneth Reid from HawkeyeMindset.com This week I’d like to discuss “Multitasking.”

Traders multitask to reduce anxiety and for neuro-stimulation. There’s an upside and a downside to this habit. Let’s take a look at how all this works and I’ll provide a link that will help you change this habit (or any habit) in just 5 minutes a day.

ANXIETY REDUCTION

Traders subscribe to news feeds and guru blogs or chat rooms to help explain and predict market movement. We naturally want to know “why” the market did X and not Y, and what it is likely to do next, because knowledge (even pseudo-knowledge) lessens anxiety.

The question then becomes: “Although you may feel better, how does that ‘knowledge’ actually affect your trading?”

Often theories and predictions work against us, because they are so subjective. If we have a theory about something it can be difficult to see the objective truth… if the truth doesn’t accord with our theory. And that disconnect can get us on the wrong side of the market.

For example, if you think the market ‘should’ go up, you will probably miss the entry for the short sale.

NEUROSTIM

Multitasking also provides neuro-stimulation, the universal antidote to boredom.

Some traders get bored almost immediately… and they absolutely hate it. For them, multitasking is like an ADD drug, because information, engagement, hyperfocus and risk are stimulants that induce a state of pleasant concentration and mild euphoria. It’s a dopamine high.

Consequently, multitasking for ‘neurostim’ can easily slide into trading addiction. Like a slot machine player, these traders are trading to trade. I’ve seen this addictive behavior in doctors and dentists who trade between patient visits or while a patient is getting prepped or numb.

I coached an anesthesiologist who traded in the hallway between operations, and a surgeon who traded forex from his hospital office. Both were losing money. The distraught wife of the anesthesiologist told me he had already burned through his kids’ college fund.

Trading addiction is also a risk for those who work from a home office. One client, a father of three, worked at home for a Fortune 500 company. He preferred to trade, so he did just enough corporate work to avoid drawing attention to himself. Although he was depleting his savings, he prioritized trading over his day job because he believed he was “on the verge of greatness.”

This particular (delusional) belief is common in male traders with Adult ADD or a trading addiction. They can’t see the self-deception, although spouses recognize it quite early… and it scares them.

NEXT STEPS

Reading about multitasking, or any other trader issue, is useful, but it’s not sufficient to actually change a sub-optimal trading behavior. You will forget about it in 5 minutes and go back to trading the way you always have. Nothing will really change.

However, if you are interested in reaching your full potential as a trader as quickly as possible then get on the fast track… join our new Mastermind Breakthrough program at Hawkeyemindset.com.

You get a weekly experiential video that will empower you to eliminate bad trading habits and install good ones in just 5 minutes a day. 50 videos a year on 50 practical topics essential for trading mastery. It’s the easiest way for traders to increase discipline and improve your trading on a daily basis.

The Mastermind Breakthrough videos are based on the same principles and techniques used by Olympic coaches and trainers for Navy Seals. Results have been phenomenal… and if you can afford Netflix, you can afford this service.

Join us in the next free LIVE Hawkeye Demonstration Room held every Wednesday at 9.30am EST US. You will learn more about volume and volume price analysis and see more examples and live trade setups. It is open to all.

Commitment

Every trader I’ve ever met or coached has been 100% committed to trading. When I ask…“When do you plan on retiring from trading?” I always get the same answer: “Never!”

But what are most traders really committed to?

Based on hundreds of coaching interviews, most aspiring traders are committed to various Outcomes… such as winning, making money, becoming wealthy, being right, figuring it all out.

While we all want these things, a commitment to Outcome, per se, can actually work against the aspiring trader. That’s the sticky paradox of trading for a living.

The Commitment Perspective Change

Over the years, I’ve noticed that there comes a time in every trader’s development when he or she needs to make a different type of commitment in order to achieve their full potential. Otherwise they stay permanently stuck at whatever level they are on.

To better understand this, I’d like you to listen to some words about commitment that continue to inspire me. They were written by a Scottish explorer and mountaineer who survived imprisonment in POW camps during WWII.

He didn’t just “face” challenges that befell him, he sought them out. He assumed risk. And in doing so, he learned a secret that literally saved his life. I think it’s something we all need to learn because trading is dangerous, too.

You can watch a free 3-minute video version of this article and hear his famous words here

(This article will have more impact/value if you listen to that video.)

The Commitment Challenge

So today I’m going to challenge all aspiring Hawkeye traders to make a commitment…not to an Outcome… but to an ongoing Process of self-improvement. What would you be improving exactly? Your ability to skillfully and effectively assume risk.

Having this ability gets us into “The Zone,” the sweet spot that lies between being foolhardy on the one hand, and risk averse on the other. As I mentioned in a previous article, another name for this mental-emotional state is ‘flow.’

And the happy paradox is that if we make a commitment to continuous self-improvement, we seem to encounter serendipitous support for achieving all our goals. This isn’t magical thinking…it’s the essence of mastery.

Next week I’ll discuss a way for Hawkeye traders to transform your commitment into highly practical action steps. Stay tuned.

Join us in the next free LIVE Hawkeye Demonstration Room held every Wednesday at 9.30am EST US. You will learn more about volume and volume price analysis and see more examples and live trade setups. It is open to all.

Greetings Hawkeye traders. This week I’d like to discuss a common trader issue that’s rather difficult to spot. I call it The Hindsight Trap.

Looking back on a cold chart, it’s natural to think that we could’ve, would’ve or should’ve known what was going to happen at those key inflection points. Indeed, hindsight reinforces a common trader belief that the market is predictable…at least by us. But this is a trap.

However, this assumption violates one of Mark Douglas’ key coaching principles: Anything can happen.

And if we didn’t catch that amazing move, hindsight also tends to foster regret and a subsequent imperative to not miss out. But when we adopt that particular imperative, which is half fear and half greed, traders become over anticipatory. We jump the gun and we become highly goal oriented.

And here’s the rub… the more important an outcome becomes, the more likely we will adopt the attitude that the end justifies the means. And once we switch over to that mode of operation, we tend to abandon discipline. Instead, we start to improvise. This is the hindsight trap.

To make matters worse, I believe there is a gender factor in this switching process: it happens so easily and quickly for men that we barely notice it… but less so for women. (Is this a testosterone issue? Probably. Men tend to be highly goal-oriented.)

True story: I was recently able to coach a woman to become a profitable futures trader in just three months, whereas men typically take quite a bit longer. The speedy progress was due to the student, not the coach.

Shelly was willing and able to follow very simple rules even when she was wrong, even when she lost, and even when she missed out. And she was willing to humbly accept that she couldn’t know what was going to happen next, so early on she just stopped guessing.

Bottom-line, she didn’t outsmart herself.

For Shelly, the inevitable obstacles and delays she faced in achieving her end-goal did not justify a change in means. She trusted her rules and focused on maintaining discipline, rather than being overly concerned about the result of her last trade.

If you want to reinforce a process-oriented Mindset in your trading, I have prepared a free video for you to download and listen to. The video has a special soundtrack, so for the best result, use stereo headphones. (And this week you don’t have to opt-in to download.) Enjoy!

Join Randy in the next free LIVE Hawkeye Demonstration Room held every Wednesday at 9.30am EST US. You will learn more about volume and volume price analysis and see more examples and live trade setups. It is open to all.

As some of you may already know, I have a Ph.D. Clinical Psychology and I’ve been a trading coach for 16 yrs. I’m an active trader myself (stocks and futures) and I’ve been a Hawkeye user since 2007.

Whatever market or markets you trade, volatility ‘mean reverts.’ In other words, it oscillates from low to high and back again. During periods of high volatility even experienced traders tend to over-focus on their P&L because it fluctuates so much.

But once we start obsessing about money, we are already in The Money Trap.

HOW THE MONEY TRAP WORKS

The Money Trap in trading is like scoreboard pressure in sports. It’s the pressure athletes feel during the last few minutes of a close game… or at a key moment where winning the very next point is crucial.

In trading, however, the game never ends… unless we end it. And because we are putting capital at risk, each and every trade has “scoreboard” significance.The Money Trap has us when we adopt these four internal Imperatives:

Don’t…

be wrong!

miss out!

lose money!

give back gains!

Many aspiring traders are caught in The Money Trap all the time, when they are trading a live account. These four (negative) imperatives are constantly running through their mind as they try to trade. And that’s a problem.

WHY YOUR BRAIN WORKS AGAINST YOU

Whenever our security becomes an issue… as it does when we constantly focus on money… our brain automatically goes into survival mode and constricts our field of mental and visual focus.

No matter how much screen real estate you have, the pressure to be right, not miss out, not lose, and not give back gains results in… tunnel vision. At critical moments, you will be gazing at an area of your screen about the size of a quarter!

This is why, when you look back over your trades later, you realize that you missed the obvious. (Maybe you were short when you should have been long… or vice versa.) But it’s even worse than that.

When your finger is on the mouse and you are hyper-focused on the price bars as they form, do you think you will remember to follow your trade management rules?

With your Lizard Brain in charge, you might cut your winners short, or chase price, or move your stop, buy high, sell low, double down or just freeze… all without actually thinking.

So how can you avoid The Money Trap; how can you stop your Lizard Brain from hijacking your trading?

THE SOLUTION

Fortunately there’s an effective solution. Let me give you an example from the world of elite sports because it applies to trading, too.

Have you noticed that the quality of athletic performance in certain Olympic events has increased dramatically over the last few decades?

In the 1980s a diver could make the Olympic team with a 1 ½ somersault. But in 2016 Michael Hixon needed to execute a perfect forward 4 ½ to qualify for the Rio Olympics. How was so much improvement even possible?

20th Century coaching culture was 100% focused on Outcome… on winning. Vince Lombardi summed it up: “Winning isn’t everything, it’s the only thing.”

In the 21st Century, however, peak performance coaches turned that success formula inside out. They realized that Outcome is beyond one’s control. So they began to encourage athletes to focus on Process not Outcome.

By not focusing on results, athletes had less stress. Less stress meant less “choking” and better adaptation to the circumstances at hand. Remarkably, athletes began to experience a peak performance state you may have heard of called ‘FLOW.’ And this was a game changer. These athletes had an edge few could compete with.

‘FLOW’ FOR TRADERS

In trading, the outcome of any particular trade is not only out of our control, it’s also randomized. According to Mark Douglas: “There is a random distribution between wins and losses for any given set of variables that define an edge.”

If you have a method with a 70% win rate, the 30 trades out of 100 that are losers will be randomly distributed in the time series. You can’t know in advance when they are coming.

If the Outcome of any particular trade is randomized by the market gods, does it make sense to adopt imperatives that imply we should attempt to control it?

Probably not.

In trading we have a choice… focus on Outcome (something we can’t control) or focus on executing our trading Process (method), which we can control.

Here’s the key point: cultivating a Process Mindset is the most effective way to reduce (even eliminate) the most common trader fears:

The Fear of:

Being Wrong

Missing Out

Losing Money

Giving Back Gains

Take a moment to imagine what it would be like for you to trade without fear. That’s the state of FLOW.

I’d like to leave you with the following question: What if creating and maintaining that state of mind became your primary goal as a trader?

(I’ll have a follow-up article next week. Until then, good trading and may the flow be with you!)

Join us in the next free LIVE Hawkeye Demonstration Room held every Wednesday at 9.30am EST US. You will learn more about volume and volume price analysis and see more examples and live trade setups. It is open to all.

This week we welcome Max Larsen, President of Future Finances Inc. to the blog as a guest columnist for a review of the week’s economic news. Max is a professional money manager, with $200 million under management and a long time user of Hawkeye.

1. Weekly Wrap
2. Technically Speaking
3. Business Optimism Goes Stratospheric
4. Inflation is Creeping In
5. Johnny Depp – A Lesson on What Not to Do

Weekly Wrap

The past week was rife with earnings, economic data and commentary from two major central banks, but the market shrugged off the busy event calendar remaining in its range bound ways.

The big news of the week was a decent jobs report with employers adding 227,000 jobs last month according to the Labor Department. This was the biggest gain since September although wage increases were rather modest. This from The Wall Street Journal (weekly summary from Briefing.com):

The backdrop of a steady but unspectacular labor market is likely to keep the Fed cautious about raising interest rates and could prevent the central bank from colliding with President Donald Trump as he aims for faster economic growth.

We shouldn’t forget about earnings season. Our very own Brad Huffman chimed in:

In addition to a slew of economic reports, earnings season continued to unfold. These were generally supportive of the current trend. The most significant weakness has come from large multinational companies indicating concerns about overseas activity. Despite those concerns, both earnings and sales growth are poised to expand for the quarter.

Please remember that historically speaking February is one of the weakest return months of the year with the worst part coming towards the end. It may not happen this year. There is a lot of money flowing into stocks right now.

Technically Speaking

I have two charts to share today. The first is from Arthur Hill of StockCharts. He points out that it has now been 79 days since we’ve seen greater than a 1% decline in the S&P 500. Talk about “range bound”…

Just look at the bottom indicator called the ROC or rate-of-change. This is nothing more than how much the S&P 500 changed on a percentage basis on a daily basis. I high-lited the 79 days in blue. It denotes a strong market to me.

The second chart is one you’re very familiar with. This is the 8-months chart of the S&P 500 (daily prices). Notice how we came into the “Support” zone last week and bounced out on Friday.

I still contend that we are due for a pullback. It may not happen, but I could envision a minor correction to the “Critical Support” area (red high-lite) which would only be less than a 5% retracement and still well within the upward trend line and above the 200 day moving average. We’ll see…

Business Optimism Goes Stratospheric

We have gotten numerous emails and phone calls on people’s concern for the stock market’s lofty state. Once again here’s Brad Huffman on a nice reply that I had to share:

Thanks for the note. The market is responding to views that tax and regulatory changes from the new administration will help improve economic conditions. We do believe in the short term we will see a slight pullback (maybe 5%), but that would be normal and draw in new investors. The technical and fundamental pictures are pretty healthy right now, but volatility will remain present as it did last year.

We have several positions in the portfolio that help us hedge any market swings so unless we see significant deterioration in the charts, we are comfortable with the moderate risk exposure we have in the portfolio.

Brad is correct. Just take a look at the most recent NFIB Small Business Index.

Like its title says – it measures the business optimism on a quarterly basis. This stratospheric 38-point jump in the number of business owners who expect better business conditions is staggering.

Whether you like the President or not – and I know there are many who don’t – it is what it is and we have to live with it. That said, there is little doubt the WSJ’s headline hits it on the head: “Trump Pace Has Heads Spinning.” Many businesses are very encouraged that someone is finally attacking the mind-numbing regulations and restrictions.

Inflation is Creeping In

We’re starting to see the possible resurrection of a little inflation. The Eurozone just reported a 1.8% rise in consumer prices while we’re hitting 2.1% in the U.S. The Wall Street Journal chimed in:

After years of fighting against deflation, the U.S., the eurozone and Japan show glimmerings of life in consumer prices and wages, evidence that an era of exceptionally low inflation is receding from the global economic landscape.

To be sure, any economic shocks could reverse this trend. Still, this is important since certain asset classes – like commodities and gold – tend to thrive in this environment. However, those sectors which are bond proxies – like telecom services and utilities – tend to do badly when inflation and interest rates rise. Be forewarned…

Johnny Depp – A Lesson on What Not to Do

Johnny Depp is having money problems and is suing his business managers for mishandling his finances. It turns out that it may not be all their fault and are counter-suing since the Pirate of the Caribbean star was spending more than $2 million a MONTH to maintain his lifestyle. In spite of repeated warnings he is now having serious money problems. This from CNBC.com:

The lawsuit said Depp paid more than $75 million to buy and maintain 14 homes, including a French chateau and a chain of islands in the Bahamas.

$2 million per month and $75 million in non-income producing assets? What could possibly go wrong? He’s obviously a very talented actor yet it boggles the mind that he could be so inept with his finances – whether he had an advisor or not… You can read the entire article HERE.

That’s more than enough for this week my friends. Congratulations to the New England Patriots. Wow, what a game. Multiple records broken – including the biggest comeback in Super Bowl history. It just goes to show you – never give up. Have a fantastic week!

Join us in the next free LIVE Hawkeye Demonstration Room held every Wednesday at 9.30am EST US. You will learn more about volume and volume price analysis and see more examples and live trade setups. It is open to all.

In last week’s video newsletter, I highlight a short trade in GBPJPY which was a beautiful example of volume leading the way to price action. In that example, I used a lot of the Hawkeye tools in harmony to show volume and price action working together (the edge using volume).

Today, I want to show you “Part II of Why Volume is So Important” from the perspective of Hawkeye Volume tools ONLY. You should see quite easily how understanding Hawkeye Volume can give you a distinct advantage (the EDGE) in your trading.

Last week’s video newsletter was shown on the NinjaTrader Platform. Therefore, this week’s video newsletter was shown on the MT4 platform. Hawkeye tools work in any market and any timeframe, to give you the volume edge you are looking for.

Join me in the next free LIVE Hawkeye Demonstration Room held every Wednesday at 9.30am EST US. You will learn more about volume and volume price analysis and see more examples and live trade setups. It is open to all.

In today’s video blog, I highlight a short trade in GBPJPY which is a beautiful example of Hawkeye Volume leading the way to price action. This shows why using Volume in Forex trading is so important.

The Hawkeye Volume tools were spot on again. As a result, the potential for good profits is high.

This example showed Volume leading the way to price action. Using volume in your trading is important. Coupled with price action, it is the Edge you have been looking for.

Be sure to join me in the next LIVE Hawkeye Demonstration Room.

Join me in the next free LIVE Hawkeye Demonstration Room held every Wednesday at 9.30am EST US. You will learn more about volume and volume price analysis and see more examples and live trade setups. It is open to all.

So many market pundits are saying a market meltdown is here etc. Well, Hawkeye Volume does not lie. Today, I’m going to show you why looking at volume will tell you if the market meltdown is here or not.

Emini Daily Chart – Market Meltdown?

Look at the Hawkeye Volume circled at the bottom of the chart. It’s white for the last four days showing no demand, i.e. the sellers or buyers are not in control. A meltdown would show increasing red selling volume.

Then look at the price where the magenta arrow is. See how the price came up and touched the Hawkeye dot and then backed off – classic price action. Until the daily price breaks the last Widebar (magenta), price will go sideways, but with no advancing volume prices will remain in this range. Price needs high volume to commence a down trend or for the market to meltdown.

Emini Weekly Chart – Market Meltdown?

Last week red volume but not high volume. As on the daily markets require high volume to reverse.

And following 6 ways a market moves the Hawkeye Trend dot has gone flat, so we are in congestion waiting for the next isolated or phantom low to show congestion parameters.

Emini Monthly Chart – Market meltdown?

Interesting. Look where the dotted line and the magenta arrow are – a doji. If this month does NOT take out the high of doji a Hawkeye Pivot will form which could push the market down for 3,5,7 timeframes. Hawkeye volume knows if the market meltdown is real or not.

[The magenta arrows are for illustration only and do not form part of the software]

Join Randy in the next free LIVE Hawkeye Demonstration Room held every Wednesday at 9.30am EST US. You will learn more about volume and volume price analysis and see more examples and live trade setups. It is open to all.

Final Note from Nigel

This will be my last blog post. I am retiring from the day to day work of Hawkeye and I have sold the business to my old partner Randy Lindsey. It has been wonderful to have been a small part of seeing so many of the ‘Hawkeye family’ not only go on to be such successful traders but also become close friends, and I am sure I will still attend the live seminars when invited.

When Hawkeye started back in the late 80s, I certainly never have thought there would be nearly 4,000 traders now using my volume algorithm. Please learn volume; 6 ways a market moves; find the right timeframe for you – as slow as possible; do a lot of work on your mental approach; money management/risk reward; and stop searching for the next indicator.

If you trade the Emini the Hawkeye KISS gives you a big heads up and saves you a minus trade.

Based on all the stock on the NYSE, Nasdaq and Amex the KISS represents if more stocks are being bought or sold, i.e. if the red line is rising it shows that more stocks are being sold across all markets and vice-versa for the green line.

Hawkeye KISS

In this example above you can see the 3-minute KISS just starting to show a sideways movement indicating there is a pause, or a possible reversal, in price. The KISS is not showing any buying as it would require the green line to rise with conviction.

Let’s now look at the price.

Blue Tick Speed Emini

Where I have placed the cyan arrow the program indicated a Volume Roadkill long entry, which was not elected.

Why? Well lets look at the yellow and red tick speeds.

Red and Yellow Tick Speeds Eminii

As you can see the Heatmaps (the indicator on the bottom of the charts) are red, and the trend on the price the dots show trend run down.

Hawkeye Perspective
By combining all three tick charts and seeing what the underlying stocks are doing across the exchanges there was FAR too much risk in a long entry off the blue timeframe.

I have deleted the other currencies so we can clearly see the USD (cyan) and GB Pound (brown).

At the first cyan arrow the two currencies are trading in the same direction, followed by the magenta arrow where they are again both in the same direction. On the daily chart below this is represented by the white congestion dots on the Hawkeye Trend.

But now look at the second cyan arrow, the USD is rising and the Pound continues to decline.

GBPUSD Daily chart

I have displayed just the volume off the daily chart shown on the middle plot, and have used the Roadkill 3-day volume on the bottom plot.

Note that the volume has shown no demand on the 3-day (white volume), reverting to selling volume on the last 2 bars. The daily volume above has 6 bars of selling.

Now look at the price. The Hawkeye Trend has gone back into downtrend. I have placed a yellow line from the last major Hawkeye Pivot, if this is taken out, LOOK OUT! It is in freefall.

At the moment this is the British pound, the grain and agriculture complex, gold, oil, and to specialise in one market intra-day I recommend the US bonds.

And most important of all is the timeframe. PLEASE do try and trade the longer timeframes, that’s where the money is.

So let’s have a look.

Hawkeye FX GBP

Here is the new colour coded Hawkeye Tomahawke chart of all the GBP crosses.

See the many opportunities to trade on big news with Brexit. But this can also be replicated with the Euro.

Soy Beans and Hogs

Examples of the grain and agriculture markets. As you can see these markets are in defined trends.

US Bonds
I love this market. Why? Because you get long, defined trend runs.

US Bonds Weekly Charts

Just look at the weekly uptrend since the beginning of 2016, making sure you only take long trades on the daily chart.

Now, if you go to your intra-day charts you know only to look at long trades where there is lower risk.

US Bonds Daily Charts

By reading the chart the Hawkeye way, using volume and price, you can clearly see a recent double top. Two yellow dots (indicated by the magenta arrows) at the last market high, then retracing to the Hawkeye stop at the green crosses (indicated by the cyan arrow).

You know you are in congestion and pull back in the weekly trend. So, only longs to be considered till the weekly changes to a down trend.

Last week gold went up 2% but the gold miners’ index, ETF GDX, rose 11%.

But be careful. We are highly overbought on gold and gold miners’ stocks GDX and should expect a pull back soon within the overall uptrend. In fact, a recent report from Morgan Stanley Australia, states that miners are now extremely overvalued. Example: Newcrest Mining (NCM.Australia) trading at $21.76 Australian Dollars, compared to fair value of $A12.90. That’s 68% overvalued.

Gold 133 Minute Chart (GLDV Golds ETF)
The 133-minute chart (a third of a day that the ETF trades) shows a classic volume upthrust, followed by 2 bars of no demand volume indicating a probable pullback.

GDX 133 Minute Chart
The ETF of the gold miners is clearer. Again a volume upthrust, but look at the Trend dots. They are going flat, indicating this move is now in congestion entry, so expect a pullback in the overall uptrend.

Definition of an UpthrustAn Upthrust Bar is a wide range bar, with a high volume and closing down. It indicates that the prices were marked up during the day, trading activity was high as indicated by the high volume, and the prices dropped to near the low (or to the low) towards the closing hours.

Friday saw a big move, and as I have been banging on about for some months there will be great opportunities this year.

So let us look at GDX, the gold miners ETF, which is a leading indicator for the gold price.

Daily Charts GDX
As you can clearly see (indicated by the cyan arrow), ultra high volume resulting in the daily price commencing a new uptrend.

My favorite stock for gold is Newmont Mining (NEM). So let’s take a look at some charts.

Newmont Mining Weekly

Look at the last Hawkeye Pivot low (yellow dot). This is pushing price up on buying volume. So the last Pivot highs (shown with the yellow dotted line) are being tested.

Newmont Mining Daily
Interestingly the high volume bar (with the yellow dot) occurred in price congestion, followed by declining volume, indicating accumulation (see my free volume book here for further information), resulting in the price commencing a trend run. But it has still to break the Pivot highs to the left (indicated by the yellow dotted line). When it does, with no part of the price bar straddling the dotted line, then we know we are in a strong uptrend.

The S&P appears to be in the first stage of breaking down. We have a triple top on the Monthly, congestion entry on the Weekly and downtrend on the Daily.

Over the next few weeks the market will test the last Hawkeye weekly Pivot high, and then test the last weekly Pivot low at 2030. It’s also forming a weekly wedge profile and when broken – watch out!

Apple, as mentioned last week, broke down. The next test will be the Hawkeye weekly Zones at $76.

BUT here is the big story. Retail is in a bad, bad way. Profits are plunging for Macys, Kohls, Nordstrom, and Gap stores.

PacSun, Aeropostale and Quiksilver have filed for bankruptcy.

Amazon is doing great, but is that because the retail pie is shrinking or have people really changed their buying habits?

A great quote I found on the web:

“A wise man once said, our entire economy is based on folk buying stuff they don’t need, with money they don’t have…on credit. When that is shaken, and folk realize they don’t really need that new pair of shoes, or their 30K mileage car will last a couple more years…We’re toast.”

So what does Hawkeye say? Let’s look at one of the retail Exchange Traded Funds (ETFs) – RTH.

Monthly Chart
Triple top in congestion and Hawkeye Volume showing two months of white no demand volume.

Weekly Chart
The price was rejected twice when it tried to break through the Hawkeye stop area. Trend is white and in congestion and three weeks of no demand and the last week selling volume.

Daily Chart
A Pivot high, indicated by the magenta arrow, is pushing prices down, with the Hawkeye Volume in downtrend.

Hawkeye Perspective
We are at major turning points on many sectors. So many opportunities to trade options and ETFs.

As you know I have been bullish on gold since mid-December and closed out my long positions last week and am waiting for a pullback and a re-entry.

What made me want to close my position?

I’m showing you two charts and this technique can work on any multiple timeframes that you might be trading.

Monthly Gold Chart
You can see at the end of February the Hawkeye Volume turned green, Heatmap dark red and there was also a Hawkeye Pivot two bars previously, indicating that we will have 3,5,7 bar reaction from this point.

The price goes up as expected and has reversed off the Hawkeye stops, which on the slower time frame always acts as resistance
Daily Gold Chart
The magenta arrow shows the red Volume has entered the market. This coincided with exactly the same point on the daily chart as the monthly chart when the price stalled at the monthly Hawkeye stops.

I have placed a dotted yellow line and also a down magenta arrow where this took place.

Hawkeye Perspective
Strategy for the upcoming week – I now want to see the daily finding support at the daily stop level and reverse to the upside in harmony with the weekly and the 133-minute chart.

And when the monthly stops are broken this market will truly be on its way.

You can use this method on any instrument you might be trading and any multiple time frame.

I will be teaching this at the upcoming April online webinar and encourage you all to come and register to really learn how to drive the Hawkeye engine. As long as you register you will receive the recorded webinar so you don’t have to be actually present to benefit from this education.

Just before Christmas, I said that 2016 there would be a great trade in gold and that certainly is the case so far. So I hope some of you loaded up on the one stock that I really like – Newmont mining, NEM.

Say Bye-Bye to the Euro

Now it’s the turn of the Euro, so get ready to say bye-bye to the Euro.

Europe is in a mess, with a huge migration problem and steady discourse between member states on how to react to this problem. This ultimately, I believe, will be the catalyst that drives the Euro path as each country looks after its own interests and citizens. Unlike America, with just one central bank, each country in Europe still has its own central bank. Each of these banks can make their own decisions, which ultimately each will do.

The Euro since 2008 has had a 32% decline and this is supposed to be a major currency. So let’s look at the charts as I believe we will have a great opportunity to trade on the short side.

Euro Monthly Chart

Since the beginning of 2009, the Euro has been in decline. And right now, it is entering congestion on the monthly chart with overhead resistance (where I have placed the blue line). However, if the low of 2015 is taken out, brace yourself!

Euro Weekly Chart

This market timeframe is displaying classic congestion with choppy volume between selling, no demand, and short-lived rallies on buying volume.

Notice where the price went right up to (where I have placed the magenta arrow) which coincides with the Hawkeye barrier which generated a yellow Pivot.

We now need to see this market come back and take out those April lows

Euro Daily Chart

As you can see from where I have placed the cyan arrow, the price is choppy and the Hawkeye Trend dots have gone flat, signaling more congestion.

We now wait for a Hawkeye Pivot high to come in, which will push the market back down. And subject to a close under the low Pivot 1.0825, congestion will end, with an exit to the downside. This will trigger our entry into this trade. Bear in mind that the other timeframe resistance and support areas must support this move.

Hawkeye Perspective

As I have with gold, I’m highlighting a position trade here which could last for several months. Eventually, I do believe a great opportunity will come our way this year.

With so much in the news regarding financial meltdown, let’s take a good Hawkeye look at the eMini.

Monthly S&P Chart

Firstly look at the Hawkeye Volume – three months of no demand and one month of selling volume, giving you the heads up that the dominant uptrend was going to retrace.

Now, look where I have placed the dotted lines on the price. The higher one shows a double top with the two Hawkeye Pivot dots in yellow, the lower dotted line shows where price came to and found support right at the Hawkeye stops (indicated by the green crosses).

6 Ways a Market Moves shows congestion, and if prices rise next month a Hawkeye Pivot low will be printed. However, if the low of this monthly bar closes under the Hawkeye stops, a down trend will be established.

Weekly S&P Chart

A congestion break-out to the downside found support where I have started the blue line on price. Now look at Hawkeye Volume – although a major price move was not accompanied by ultra high volume, just high volume, and at the end of the week, Friday Hawkeye Volume shows buying volume. And if next week is up, a Hawkeye Pivot low will be established

Daily S&P Chart

Now it gets interesting. Remember what I teach at Hawkeye seminars – “The Tanker Effect”; when the markets are fast and volatile price shoots through the previous support. Look at the lowest price bar. Three days back it straddled both previous lows (shown by the blue lines on the chart), and rallied on buying volume, followed by two days of neutral volume indicating support as shown by the price action.

And now the final piece. 6 Ways a Market Moves. Look at the Trend dot crunching right up, still down so still a trend run. But if Monday is up the dot will go flat indicating congestion entrance.

Its make-your-mind-up time this week on the 30-year US Bonds. They have been in a range for the past year; with the FED raising interest rates one would think Bonds would sell off, but the opposite is happening, suggesting the market does not expect another rate raise for some time.

So let’s look at the charts.

US Bonds Weekly Chart
As you can see, the price touched the upper Trend line on Friday and closed at its highs. Also the volume has seen buying for the last 6 weeks supporting this price move. However, there is overhead resistance to break through on the daily.

US Bonds Daily Chart
Hawkeye Zones clearly show resistance all the way up to 163, and buying volume is accumulating. So if these Hawkeye Zones are breached, its off to the races, and if it stalls out and breaks under 153 a downtrend will be in place.

Hawkeye Perspective
An interesting week ahead with all the turmoil in the markets. Let’s look to Bonds for a great trading opportunity.

Firstly I do hope you opened the email announcing the International Trading Profits Summit in beautiful, warm Palm Beach, USA in March. I really have assembled a wonderful team of traders to give you the tools and knowledge to make 2016 a fabulous year. Extended to three full days and kept at the same price of $750. So please come along.

Secondly, I wish you a very Happy and Prosperous New Year!

So, lets jump right in and take a look at what the new year is bringing in. All financial letter writers will be talking about the first week of trading, and in particular the stock markets, which have all had nearly a 10% down move from the 2015 highs.

With the markets rallying in the morning session only to be sold off in the afternoon, this the typical thumbprint of a market in crisis, with the bias to the downside. But let’s look at Hawkeye and the charts.

ES Monthly Chart

You can see where I have placed the yellow dotted line there had been four attempts to break that price, but now we are in congestion. With the Trend dots flat and white, and support off the Hawkeye Zones at 1785, and volume showing no demand and bias to the downside.

ES Weekly Chart

This makes it all far more visible. Price rejected off the Hawkeye Zones and testing the Hawkeye Zone at 1887. Interestingly, Friday’s volume was normal and close to the bottom of the range which leads me to think that it was an amateur down bar. If the professionals were selling there would have been far more volume.

ES Daily Chart

This really does tell the story – the downtrend on Thursday gave high volume followed by average volume on Friday. Again suggesting amateur selling not professional.

Hawkeye Perspective
This week will tell all. There was good jobs news last week in the USA and the market should have rallied. So let’s see if it finds support off the daily and weekly Zones and rallies.

We certainly don’t want to be long until Hawkeye gives it to us on the daily and weekly. Major support is at hand. But with China in free fall, anything is possible

I had an extremely distressing email this week from a user who after my last gold email went long. I specifically said that gold was in accumulation and would zigzag till weekly resistance was broken. AGAIN THIS REINFORCES THAT THESE NEWS LETTERS ARE FOR EDUCATION ONLY.

So lets look at gold again and my opinion has not changed

Weekly Gold Chart

The price is in a Hawkeye Zone, indicated by the cyan arrows. Now look at the Volume – four red and one green bars, followed by two red bars. But the last two red Volume bars have no effect on the price. The Zones are holding and the Hawkeye Trend dots are starting to go flat = no momentum.

Daily Gold Chart

Thursday there was a down day and volume was rising, but not enough with the range of the bar to show aggressive volume. Hence, on Friday the price rallied and closed at the Hawkeye Trend dot on declining volume, indicating no follow through on the previous selling.

Look at the two dotted lines indicating the congestion zone. I do hope you guys really study the Six Ways a Market Moves.

Hawkeye Perspective

Still in accumulation mode, the longer term bias is short, so wait until the weekly goes long, but it could be a great trade for 2016.

There has been a lot in the Hawkeye Skype room this week on the many ways to interpret the HAWKEYE FATMAN currency strength indicator, and many comments that many traders find it hard to hold a trend and come out far too early. So lets look at a simple strategy.

Fatman 90 Min Chart
This is set to 90 minutes (3 times the speed of my fast chart) as i am trading off the 30/60/120 min charts, which gives many low risk trade entries. Look where I have placed the magenta and cyan arrows…both at extremes, showing weakness in the Aussie dollar (red) and strength in the euro (green) which equates to a low risk entry.

EURAUD 30 Min Chart
Where the first cyan arrow is the Hawkeye volume roadkill cyan dot, indicating a buy. The other 2 time frames; 60 and 120 min charts, are both displaying green buying volume and green trends with rising trend dots; so BANG entry.

Now to the difficult part…staying in the trend. THIS IS WHY YOU HAVE TO LEARN 6 WAYS A MARKET MOVES.

Look as the trend unfolds, there are two areas of congestion indicated by the blue boxes, and each time after a pause it breaks out and continues trend run. We knew that the bias was to the upside as both the 60 and 120 minutes are in solid uptrend, so hold tight…the market is just pausing.

Now look at the last several bars and you can see the trend dots starting to crunch up…this is consistent with the Fatman showing the AUD and EURO approaching the oversold and overbought area, so time to exit trade.

The precious metals market has been in a solid downtrend for quite some time. However, Hawkeye knows, using Volume Spread Analysis, that accumulation is showing in these markets. And by the reaction of price to this accumulation, this could be the opportunity of 2016! Let’s look at the charts…

NEM Daily

One of the world’s largest miners, NEM, has shown nothing but accumulation. Look at the Cyan arrows I have placed on the chart, all showing higher bottoms and the rising volume… again showing accumulation. Then BANG… on Friday, Hawkeye shows a wide-bar up with confirming very high Volume Radar.

GDX Daily

The Gold Miner’s Index, GDX (with a basket of major miners), is also showing accumulation. Again I have placed Cyan arrows on the chart showing higher Hawkeye Pivot lows, and again on the Hawkeye Volume, showing strong breakout volume on Friday.

Gold Futures Contract Daily

While this Gold futures chart is not quite as clear, you can still see 2 days of buying volume and a Hawkeye Pivot low on the price, all shown by the Cyan arrows I placed on the chart. Compare with the Gold ETF – GLD.

Hawkeye Perspective
Like Gold, Silver and Platinum charts show the same profile. However, there is overhead resistance on the weekly charts to break through. So Gold will probably zig-zag in price, accumulating more volume in the process, in order to continue it’s advance through this resistance.

I am excited about the prospect next year for precious metals. That’s why I will hold a Special Webinar just on this topic in January 2016. I will send an email out with registration details soon.

The Crude market is showing weakness in all time frames. If you were using Hawkeye, your positions would be extremely profitable. So let’s go and do our volume analysis using our Hawkeye tools.

Crude Monthly Chart

As you can see, price was rejected by the Hawkeye Zones, and where I have placed the magenta arrow shows Hawkeye Volume indicating selling for the last two months. Great signs of crude oil weakness are evident.

Crude Weekly Chart

The magenta arrow shows selling last week. The trend is down, and the bottom of the Zone at 38.50 is the next area of resistance. Again, great signs of crude oil weakness.

Crude Daily Chart

The story unfolds. For the last seven days sell/no-demand Volume has been dominant, and where the magenta arrow is you can see the red Trend dot has broken out of congestion to the downside.

Hawkeye Perspective

All time frames are short. The weekly bottom of Zone at 38.50 must hold or the market will be in serious danger of free fall. These are all great signs of crude oil weakness.

Are you ready for a potentially great trade? The dollar index is breaking out of an 8-month trading range. This is happening on some of the strongest economic numbers since 2009. The Fed was requiring stronger economic data – and that arrived on Friday.

The sentiment is that there will be a rate raise at the next Fed meeting. If this is the case the dollar rally is just starting and Hawkeye will show the way.

Dollar Index Monthly Chart

We are now approaching the high that was established 8 months ago and a Hawkeye Zone at 104.13, but we require more volume to provide the market energy to breach this overhead resistance.

Dollar Index Weekly Chart

Price is now in a Hawkeye Zone, with the top side being 101.45. However, attendant volume is not rising, which it needs to do to be able to break out to the upside.

Dollar Index Daily Chart

Now this really tells us the story: Good increasing daily volume on a Hawkeye Wide Bar on Friday. As a result, price should retrace back into the Wide Bar in the early part of the week. Then, look for volume to push price up to the Hawkeye Zones area

Hawkeye Perspective

A potentially great trade is in the making. If 101.45 is breached we should be on our way to a substantial Dollar rally, and a potentially great trade. Overhead resistance has to be taken out, so no maverick trades please. But have this on the radar as a potentially extremely profitable trade is being set up.

And remember, if the dollar goes up look to a short bond trade… yet another potentially great trade.

I often get asked which is the best market to trade; my reply is Bonds. They are world’s largest market by volume of trades (contracts), and have extended trends. As always, look for the longer time frames and here Hawkeye’s Gearbox does the trick.

Bonds – Yellow Time Frame

Here, on the left of the chart, you can see the Hawkeye Gearbox producing the correct tick speed to set your charts to every day, and below is the Gearchanger showing you during the day which speed to trade i.e. yellow = the yellow tick speed etc.

Now look at the chart, you can clearly see where the magenta arrows are indicating where to go short with a full Hawkeye setup.

Bonds – Red Time Frame

The magenta arrows show Hawkeye entries. There is a minus trade (indicated by the cyan arrow), but students of 6 ways a market moves would probably exit when the price entered the congestion zone (indicated by the red circle)

The euro had a break down on Thursday and Friday. Why? Well, Europe is a mess – with the huge number of immigrants from the Middle East, the European Central Bank hinting at more QE, and exceptionally high unemployment.

Technically? Well, let’s look at the charts, starting with the EURUSD monthly.

Since July 2014, there has been selling volume (indicated by the lower magenta arrow) as price exited the Hawkeye Zones (the upper magenta arrow), red selling volume continued and Hawkeye Trend went to bearish.

In the weekly chart we can see that since early August the euro has been in congestion (indicated by the cyan arrow), price went to the Hawkeye stops (indicated by the magenta arrow) – which, as I have pointed out many times, is an area of resistance.

On Friday Hawkeye showed selling volume, and is now indicating a further bias to the downside.

The daily chart shows us how price has tested the Hawkeye Zones and been rejected (indicated by the upper magenta arrows), volume has been short all week (indicated by the lower magenta arrow), and the Wide Bar (indicated by the yellow arrow) has been taken out with a lower close on Friday.

Hawkeye Perspective
Weakness across all time frames. Look for support at the Zone areas shown on all time frames, but a test of the monthly Hawkeye Zone area is on the cards.

Below are some “tried and true” Tips we use for consistent trading success.

Clear your head before you start trading . Keep yourself well hydrated with clean fresh water. If you are really having a bad day, don’t trade.

Take a step away until you are able to come back with a clear mind.

Take a moment and think about your trades before you execute. You will need lot of patience to wait for the right setups. A good trade is worth waiting for.

Focus on the quality of trades, not quantity of trades. Trade less, but win more!

Use a trade journal. It serves as a tool to reveal past mistakes and enables you to identify weaknesses or strengths in your day-to-day trading. Without an accurate trade journal, common mistakes are often repeated.

Develop a trading plan that works with your trading style and stick to it. Understand it is YOU making the mistakes not the market and not your indicators! Practice and strive for FLAWLESS EXECUTION.

Trust your setups. Don’t abandon the weeks and months of work invested in building your trading plan. If you start doubting your signals or trades, go back to a simulated account until you build the confidence you need to trade your plan successfully. Once you begin to “cherry pick” your trades, you are done for.

Develop multiple trading strategies for varying market conditions. For example, have a strategy for trading trending markets, and have a different strategy for choppy market conditions.

Be flexible and practice trading multiple markets. This will broaden your trading skills and present you with more trading opportunities.

Read the news of the day before you start trading, and know when major news events are being announced so you are not caught in a trade during an announcement.

Practice sound money management principles. Begin small and don’t increase your lot size until you have earned the right to do so. You earn the right to increase your lot size by showing consistent trading profits.

Never add to a losing position (unless that is part of your strategy).

Pactice your trading plan in a simulated account until you are consistently successful for a minimum of 3 weeks. Adjust it as necessary until you prove that you can show weekly profits for 3 straight weeks minimum.

Remember that trading is your business profession. Give yourself time to learn the skills needed to get the job done.

Find a good trading “buddy” to help you focus on success, and help keep you accountable to following your trading plan.

Looking at the daily chart, I have placed a blue line after Apple had a Wide Bar down (first blue arrow) then rallied back up.

There are now six Hawkeye Pivot lows, and the Trend is neutral, indicating congestion. But look at the Hawkeye Volume (last two blue arrows) – classic accumulation volume. So expect a test to 116 area, and if taken out, the commencement of an uptrend.

Now let’s take a look at Coffee.

The Wall St Journal said this week that food prices have increased for the first time in 18 months, and the Brazilian Real is showing strength, which is good news for coffee and the charts are starting to support this.

Let’s look at the monthly chart first. It has a Pivot low coming in (indicated by the cyan arrow) if the price continues up. The weekly has phantom Pivot lows and green buying Volume (indicated by the cyan arrows), and the daily is in up Trend with good accumulation volume over the past two weeks

And finally Live Cattle.

The monthly chart shows the price right down and found support at the Hawkeye stops (indicated by the cyan arrow). The weekly has a Hawkeye Pivot low and green buying Volume (indicated by the cyan arrow). The daily shows a great example of accumulation volume taking place after a considerable down trend (indicated by the cyan arrow).

Hawkeye Perspective
Be patient, a set up is imminent in all three markets.

Today was the first day in almost two months that the US Bonds are trying to break out.

Lets take a look at the US Bonds daily chart.

The cyan arrow points to where the market had a false break to the downside on September 15, but has since rallied .

Today, the Bonds are rallying due to weak economic information. Ideally, you would want to see the Bonds having a strong close in order to confirm a break of the dotted line 161-17. And on Monday a continuation of the rally with no part of the bar straddling the yellow dotted line.

The market is in an uptrend. However the resistance line (the yellow dotted line) has been tested multiple times (indicated by the magenta arrows), and the market appears to struggle around this price point.

So be patient.

Hawkeye Rule

Resistance is never broken until no part of the bar is straddling the old resistance.

A few weeks ago I did some analysis in the Emini, saying last week would be critical and it was.

So lets take a look at the chart.

Where I have drawn the yellow dotted line showed a double top, the bar prior to the magenta arrow broke though but straddled the price.

So, if you were a rookie trader you could be forgiven for thinking it was a breakout to the upside. WRONG! Resistance areas are not rods of steel but rubber bands, so that bar in fact just stretched the resistance area and then came back.

Look at the bar where the magenta arrow is; no part of the bar is touching the blue support up line, hence that is a break of support/resistance.

Hawkeye Perspective

So, you can see the importance of the Hawkeye rule to wait until no part of the bar is touching support or resistance and the Hawkeye Volume is colored in the direction of the breakout.

Now, all of this (and much more) is demonstrated in our FREE training room every Wednesday at 9am Eastern, by my colleague Randy Lindsey.

So, I cannot encourage you enough to come along to the Wednesday room.

I have had a few emails over the last two weeks requesting I give you a Hawkeye analysis of the S&P – so here it is.

To set the stage for the Daily chart, let’s look at the monthly and weekly charts and see what they are telling us. The monthly chart has entered into congestion, based on a Pivot high from three months ago. The weekly chart is also in a wide congestion zone, with the high at 2117, and the low at 1821.75. Current price is closing within the previous wide-range bars, which is what we expect to see.

Now to the interesting part.

This week is a big week. Wednesday begins a two-day FOMC meeting, and the markets will be waiting and choppy till the announcement. So lets look at the chart.

The magenta down arrow shows overhead resistance. The first cyan up arrow shows the Trend line supporting the market. The second cyan up arrow shows the Trend line on the volume, showing a buying volume profile has started over the last three days. The red arrow pointing to the Roadkill indicator, set to three days, shows no demand volume either up or down. The red arrow on price shows the Trend dot is flattish, showing congestion parameters, Wednesday’s pivot high and Thursday’s phantom pivot low.

Hawkeye Perspective

With news later this week, no swing or position trading till that is announced. Remember you are trading risk. However, all will be revealed when the magenta arrow line is broken or when the cyan up arrow line on price is taken out. Volume is showing an upside bias at the moment.

Now, all of this (and much more) is demonstrated in our FREE training room every Wednesday at 9am Eastern, by my colleague Randy Lindsey.

So, I cannot encourage you enough to come along to the Wednesday room.

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